The Australian Taxation Office (ATO) describe OTE as the total of:
- Earnings in respect of ordinary hours of work; or
- Earnings consisting of over-award payments, shift-loading or commission.
While this seems simple enough, in practice the application can be difficult … and expensive when your accountant starts pointing out that the now overdue underpaid super is no longer tax deductible! Below are some of the most common pitfalls when it comes to calculating OTE and subsequently SG:
- Overtime hours are not considered OTE and therefore do not have SG.
- Parental leave payments are not considered OTE.
- Expense allowances are not considered OTE.
- Performance, Christmas or other extra-gratia bonuses are considered OTE and therefore do require SG.